Applications for unemployment benefits were essentially unchanged last week, reinforcing the view that the U.S. labor market remains on solid footing despite elevated interest rates.
Why it matters: A resilient labor market gives the Federal Reserve more flexibility to keep interest rates elevated, or even raise them further, if inflation remains stubbornly high.
- The Department of Labor reported that seasonally adjusted initial jobless claims totaled 199,000 for the week, an increase of just 1,000 from the previous week’s revised reading and exactly in line with economists’ expectations.
- Despite the slight increase, claims remain near their lowest levels in nearly seven decades, underscoring employers’ continued reluctance to lay off workers.
Continuing claims, which measure the number of Americans receiving ongoing unemployment benefits, rose by 24,000 to 1.8 million for the week ending July 25. While that was the highest reading in four weeks, it remains low by historical standards.
- The report adds to a growing body of evidence that the labor market has cooled only modestly despite higher borrowing costs and persistent inflation.
Impact on Mortgage Rates: With both initial and continuing unemployment claims remaining historically low, the labor market is giving the Federal Reserve little reason to ease policy. If inflation pressures persist, the strength in employment could support higher Treasury yields and keep upward pressure on mortgage rates.